Done Deal: Google Seals Lease With NASA For Moffett Airfield

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A Google Inc. subsidiary has sealed a deal with NASA to lease Moffett Field — plugging in the largest puzzle piece yet in Google's massive Peninsula real estate expansion and paving the way for the rehabilitation of the storied Hangar One.

The deal, first announced in February, became official today, providing a first look at the financial terms. As part of the agreement, Google subsidiary Planetary Ventures LLC will pump $200 million into property improvements, including the renovation of Hangar One, Hangar Two and Hangar Three — satisfying a major goal of preservationists who have been fighting to save the historic structures for years.

Mountain View-based Google will pay a total of $1.16 billion in rent to the government over 60 years, according to a NASA press release. That doesn't include $6.3 million a year in maintenance and operation costs.

"We look forward to rolling up our sleeves to restore the remarkable landmark Hangar One, which for years has been considered one of the most endangered historic sites in the United States," David Radcliffe, vice president of real estate and workplace services at Google, said in a statement.

Google will also create an educational facility "where the public can explore the site's legacy and the role of technology in the history of Silicon Valley," the announcement said.

An airport — and a golf course too

"This is great news," said Lenny Siegel, a Mountain View councilman-elect who led the Save Hangar One Committee. "We finally have assurance that Hangar One will be re-skinned, Moffett Field's facilities will be put to scientific use, and there will be a community-oriented educational center at Moffett Field."

The NASA property sprawls over 1,000 acres and includes the hangars, two runways, a flight operations building and a private golf course.

Google executives have long based their private aviation fleet at Moffett Field and used the runways under an agreement between NASA and their holding company, H211 LLC. Under terms of the lease announced Monday, NASA, the Navy, and other private and public air travel will continue to use the facilities.

Not everyone was happy about the arrangement, however. Santa Monica-based Consumer Watchdog issued a news release after the deal was announced on Monday, decrying the space agency's past relationship with Google executives. NASA was criticized in late 2013 for allegedly providing Google execs jet fuel at a discount worth up to $5.3 million.

"This is like giving the keys to your car to the guy who has been siphoning gas from your tank," said John M. Simpson, director of Consumer Watchdog's Privacy Project, in a news release.

Google's plans

Google wasn't saying much on Monday beyond its statement in the NASA news release. But as I previously reported, NASA officials said Google would use the 350,000-square-foot Hangar One for research-and-development into space and aviation technologies, including robotics.

It's unclear what Google's plans are for the larger area. But it's unlikely that Google could build much additional space on the Moffett Field land it just leased. The original offering memo lists one potential development area suitable for new construction. That site would allow just 90,000 square feet of new ground-up construction — a tiny amount, in Google terms.

But Google is planning to house thousands of employees at Moffett Field under a separate project. Google already leases about 42 acres from NASA on the northern edge of the airfield for a new, 1 million-square-foot ground-up campus called Bay View that has not yet started vertical construction.

And there are other possibilities. The one piece of the North Bayshore that Google doesn't control — for now, anyway — is a 77-acre chunk of land at Moffett Field fronting Highway 101. An educational consortium called University Associates LLC already leases that property from NASA. That land was earmarked for a huge R&D campus that also included a new residential community but has been unable to get going.

From a real estate perspective, Google's Moffett Field lease gives Google contiguous control over a huge swath of the North Bayhore. After dozens of leases and acquisitions both large and small, you can now walk from Palo Alto, to Mountain View, across Moffett Field and into Sunnyvale and never leave property either owned or leased by the company.

Hangar One fix

The deal is a milestone in the long and winding history of Hangar One, the iconic and beloved structure visible from Highway 101 built in the 1930s for a huge Navy airship.

That airship — the USS Macon — sank in 1935, but the hangar remained in use until the Navy handed Moffett Field to NASA Ames Research Center in 1994.

In 2003, NASA found harmful polychlorinated biphenyls (PCBs) leaking from the siding. Charged with cleanup, the Navy opted to strip the panels, which also contained asbestos and lead paint, and to encapsulate the skeleton with a protective epoxy coating.

But the Navy didn't have the money to re-skin the structure, and it sat skeleton-like despite an offer from Google-controlled H211 to rehabilitate it in return for allowing its planes to be stored inside. Its long-term future was unclear.

Local reaction

NASA put up the property for lease last year as it sought to shrink its facilities footprint and bring in new revenue.

"As NASA expands its presence in space, we are making strides to reduce our footprint here on Earth," said NASA Administrator Charles Bolden in a news release.

"We want to invest taxpayer resources in scientific discovery, technology development and space exploration – not in maintaining infrastructure we no longer need," Bolden said. "Moffett Field plays an important role in the Bay Area and is poised to continue to do so through this lease arrangement."

A news release said that Google would take over operating the site after finalizing a joint plan with NASA, the Environmental Protection Agency and California Water Quality Control Board "to ensure continued environmental stewardship and protection of the existing remedies of the site."

Congresswoman Anna Eshoo on Monday welcomed the announcement, saying it "honors Moffett Field and Hangar One as part of U.S. Naval history, while looking to the future by promoting research into space, aviation and other emerging technologies."

Eshoo made the rehabilitation of Hangar One a major priority and in a news release singled out congressional colleague Zoe Lofgren, Minority Leader Nancy Pelosi and a long list of community and business groups for supporting the effort.

Siegel, the longtime Hangar One advocate, said that he hoped that Google, NASA and neighboring cities would establish a community advisory commission to develop proposals for "addressing the transportation and housing challenges associated with the reuse of Moffett Field."

But on Monday, he was mostly in the mood to celbrate.

"It's not just that they're resurfacing the building, but they have plans to use it, which has always been the goal," he said.

Nathan Donato-Weinstein covers commercial real estate and transportation for the Silicon Valley Business Journal.

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